Bitcoin Mining Cost $86,700: To Surpass Soon?
Bitcoin uses a consensus method called “proof-of-work” in which miners compete to hash the next block on the chain.
Electricity, a constant cost, is the miners' biggest expenditure with this computational capacity. Validators earn block incentives for adding the following block, which motivates mining activities.
Since power rates vary, mining costs vary by area. The graphic Ali referenced from MacroMicro utilizes Cambridge University data on BTC electricity use to calculate an average.
In the graphic below, the average Bitcoin mining cost has fluctuated over the previous several years.
The following graph shows that the Bitcoin average mining cost (blue) was below the cryptocurrency's price earlier in the year, but it has now risen beyond it.
The Issuance, or amount of tokens miners mint everyday, affects the average cost of mining Bitcoin, which explains this abrupt surge.
The network's issuance, which is the total of the block rewards mined in a day, is usually set since block rewards are fixed in value and frequency.
Some events don't follow this. Those are Halvings. Periodic occurrences every four years permanently cut block payouts in half.
The fourth such occurrence in bitcoin history happened in April. Naturally, the Halvings raise the cost of mining 1 BTC since miners now get half as many rewards for the same labor.
It's hardly surprise that coin manufacturing costs rose sharply with the last Halving. This measure is $86,700, therefore MacroMicro's estimate puts the typical miner underwater.